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Students' Pell Grants shrink
By Natasha Bhuyan
Arizona Daily Wildcat
Wednesday, January 12, 2005

A new Pell Grant eligibility formula passed by Congress will save the federal government $300 million per year while shutting out thousands of students who depend on Pell Grants to help pay for college.

Under the new formula, announced in late December by the U.S. Department of Education, about 1.3 million university students across the nation will receive smaller Pell Grants next fall, while 80,000 to 90,000 are expected lose their Pell Grants altogether, according to The Chronicle of Higher Education.

However, since the Arizona tax structure has not changed significantly in the past decade, the impact the new federal formula will have on UA students should be minimal, said John Nametz, director of the Office of Student Financial Aid.

"I don't think it will have the kind of effect (here) as it will have in New York," Nametz said. "But it will affect our students a little bit negatively."

The maximum Pell Grant awarded is $4,050 while the minimum is $400. Students whose family incomes are in the upper margin of eligibility and receive approximately $400 in grant money are expected to lose their Pell Grants entirely, according to The Chronicle of Higher Education.

In Arizona, Nametz said students on average are expected to lose about $80 from their Pell Grants. About 7,000 students at the UA are Pell Grant recipients, totaling $19 million in aid, Nametz said.

In addition, since the federal formula system is also used to calculate other need-based aid, Nametz said students' eligibility for different forms of financial assistance, such as subsidized federal student loans, could also change.

The Pell Grant program, which is federal financial aid given to college students based on need, will be reduced the most based on new tax tables in each state.

According to the Federal Register, the new formula changed the amount families are allowed to deduct for state and local taxes. The updated formula relies on tax data from 2002, while the old formula used tax tables from 1988.

But Nametz said there is controversy surrounding the change because of the methodology used by the U.S. Department of Education. Critics of the change argue the 2002 data is an inaccurate reflection of a family's tax burden, as many states have raised their taxes since then, he said.

"Other taxes have gone up," Nametz said. "The whole controversy is are they doing this realistically, taking into consideration all the taxes the families are paying?"

Roman Covarrubias, a biochemistry junior on a Pell Grant, said although $80 is not a big loss, it still means his parents will have to contribute more money to his education than before.

"At the end of the semester, I usually end up short like $500," Covarrubias said. "I'm just going to have a tighter budget."

UA President Peter Likins said since the Arizona universities will not be highly impacted, the UA will not try to pursue Pell Grant compensation from the state.

"I would not want to go to the state and say, 'Please make up for the failings of the federal government,'" Likins said.

However, Likins said financial aid is a priority at the UA, and is asking the state to do more in terms of state-based financial aid, by matching the Arizona Financial Aid Trust at a 2-to-1 ratio.